Interest rates on tax saving fixed deposits by top banks

Conservative investors often invest large sums in fixed deposits to earn assured returns on a regular basis, insulated from wild volatility of markets.

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Besides regular FDs, investors also explore tax-saving fixed deposits for earning higher interest while also saving some money via tax exemption.

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It is imperative to know that the tax deduction under section 80C is allowed only on the amount deposited in the fixed deposit, while the interest earned on it is taxable.

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When you happen to opt for joint deposit, the tax benefit under section 80C is extended only to the first holder of the deposit.

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It is vital to remember that the minimum amount is ₹100 while the maximum which one can deposit is ₹1.5 lakh in one financial year.

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Banks offer following interest rates on tax saving FDs:

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State Bank of India: The largest state lender also offers the same interest rates as on regular fixed deposits, i.e., 6.50% per annum. The minimum amount is Rs 1,000 and the maximum is Rs 1.5 lakh.

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Punjab National Bank: The second largest state lender offers 6.50% to regular citizens and 7% to senior citizens on tax saver fixed deposits.

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HDFC Bank: The bank offers 7% to its regular citizens. Senior citizens are entitled to receive an extra 50 basis points. One can opt for both monthly and quarterly payout of interest.

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ICICI Bank: The bank offers 7% on tax saving FD to regular citizens and 7.50% to senior citizens. The bank enables depositors to opt for monthly or quarterly payout of interest.

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Kotak Mahindra Bank: The bank offers the same interest as on regular fixed deposits. On a five-year FD, the private lender offers 6.20% interest rate per annum.

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